I don't like the idea of a shade over the transom. it's a beautiful window. what about a type of glass inlay, stained glass or a leaded glass? they make it to fit those dimensions and you install it w/a special caulk to hold it in place. I did one w/our bathroom window. yours could look something like this you could have any design you want, just showing an example. I think it would look way better than covering it. if you want the name of someone, let me know, I have a girl on Etsy who makes custom stained glass/beveled glass. i've also seen these faux iron covers for transoms if you really don't like the transom, another option would be to have it removed and covered w/drywall. I like the idea of blinds. roman blinds, woven woods, silhouettes shades, etc. these are cellulars and come in a ton of colors/sizes (blinds.com) decide which look you like, and then go from there. beautiful room w/all of the light. I would do a nice potted plant in the corner of the two windows you could also do the plant, woven wood blinds, and some white drapes like so: I wouldn't bother w/shades on the door unless someone in the house behind you can see right in.

I appreciate the answers so much! This community is great. A few things: We have an entry table on the wall behind the 2 seater couch (the couch blocks the view). I want to create a nicer area, but living room is first. The couches are brand new and staying, we love them! Maybe we aren't traditional style, I've just been saying that because we don't want modern or farmhouse, rustic doesn't fit with our house style, and I don't really know what a lot of the other types mean. We want something relaxing, not too bold or eccentric. My husband has a high stress job and we really just want a comfortable relaxing home. Gray isn't a color trend for us, its something we really like. Also, the blinds were a quick fix for privacy when we moved in. They were about $3 each and allow us some time to figure out what treatment we really want. @Mon Thank you for your ideas! I love the curtains, I do want something with a pattern (except geometric which makes me feel like I am in college for some reason). I like what you said about the feminine touch, I didn't realize the sofas were masculine until you said that. I think I can balance it out though with accents. I'm having a hard time visioning the chandelier instead of the fan but I will highly consider it. The fan is new, I get the feeling the sellers just put anything up there because it isn't really large enough for the room. @Elena Ermolaeva Your designs are excellent! Is this to scale with my living room? This layout gives the flow I was wanting but I was afraid of putting teh couch in front of the window. I didn't want to try to force the tv as a focal point because I am in love with that large window. I'm definitely not afraid of going a little darker with the walls. Even though our area isn't large, I feel like with all the windows and natural light I can afford to go a little darker. Plus adding in light curtains balances it out. When you suggest shelves, do you mean on the 7'7" wall where the large sofa is now? I didn't think of that, I was just trying to work around the wall. Great ideas! Since privacy is a concern, should I go for nicer blinds, or a shade, along with curtains? Thanks everyone!

@Beverly what do you think?

All of your choices are nice and the floral is pretty. I am not clear on whether this will be for drapes and/or shades. The two smaller windows look like they are more candidates for shades or blinds versus drapes. Plus there appears to be a fireplace in the center of those two windows - and the whole setup there really doesn’t seem to have adequate room for drapery panels; at least not for adequate panels. You would like a sort of laid back, welcoming feel to the space and you are in California. I would recommend something along the lines of bamboo shades on all the windows, or maybe woven wood type shades or blinds - there are lots of great textures and styles in those. You could also go with some simple Roman shades. But the idea is - something neutral/open/airy on the windows - and then bring in some pattern and maybe a touch of more vibrant color in pillows and other accessories. I don’t know if you are planning on art for the space - but that could have color, also. But it could also be black and white photographic art - maybe a gallery wall. Or metal or fabric art. Whatever art you love and I really do not see art as an accessory. Art is art. Below: Not your color scheme here - but all the throw pillows + the throw could work with your colors and design.